Under what circumstances will Bonchon's operating restrictions within the Protected Territory terminate?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
Within the Protected Territory, neither we nor any affiliate (as defined in Section 3.04 below) will operate or grant a franchise for a Bonchon Business operated under the Proprietary Marks of the type franchised to you hereunder, except as provided in Section 3.04 ("Rights We Reserve"). These restrictions will terminate immediately upon the expiration or termination of this Agreement for any reasons.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the operating restrictions within the Protected Territory will terminate immediately upon the expiration or termination of the Franchise Agreement for any reason. This means that once the agreement ends, either through its natural expiration or due to early termination (whether by Bonchon or the franchisee), the restrictions that Bonchon places on its own operations within the franchisee's protected territory will no longer be in effect.
This provision is significant for prospective franchisees because it clarifies the duration of the protected territory. While the agreement is active, Bonchon generally agrees not to operate or franchise another Bonchon business of the same type within the protected territory, subject to certain exceptions. However, this protection ceases once the agreement is no longer in effect.
For a franchisee, this means that upon termination or expiration, Bonchon could potentially establish a competing Bonchon location nearby, which could impact the franchisee's former customer base. It is important for franchisees to understand the conditions under which the agreement can be terminated and the potential implications for their business after the agreement ends. Franchisees should carefully consider the initial term of the agreement and the renewal options available to them.